Marketing ROI Calculator
Calculate your exact Return on Ad Spend (ROAS) and True Net ROI by factoring in ad spend, agency fees, and cost of goods sold.
Campaign Data
Hidden Costs (Optional)
Campaign Returns
True Net Profit
Revenue / Ad Spend
Rev - COGS (Before Ads)
Summary Match
Why ROAS is a Dangerously Misleading Metric
In the digital marketing world, agencies and self-serve ad platforms (like Facebook Ads or Google Ads) report heavily on ROAS (Return on Ad Spend). While ROAS is a good indicator of whether an ad is working, it is a terrible indicator of whether your business is actually making money.
The "Profitable" Agency Illusion
An agency might boast that they got you a 3.0x ROAS. They spent $1,000 on ads and generated $3,000 in sales. Sounds great!
However, if your product costs $1,500 to make (COGS), and you paid the agency a $600 management fee, your total costs were $1,500 (COGS) + $1,000 (Ads) + $600 (Agency) = $3,100.
Despite a 3x ROAS, you actually lost $100.
Marketing ROI vs True Net ROI
To properly evaluate campaign success, our calculator separates returns into two distinct categories:
- Marketing ROI: Measures the return isolated strictly to marketing expenses.
(Revenue - Marketing Costs) / Marketing Costs
Use this to compare the efficiency of different ad campaigns or agencies against one another. - True Net ROI: Measures your actual bottom-line success after paying for the product itself, paying the ad network, and paying your marketing staff/agency.
(Net Profit / Total Investment)
Use this to ensure your business stays solvent. If this number is negative, turn the ads off immediately.
Frequently Asked Questions (FAQ)
What is a good ROAS?
A "good" ROAS depends entirely on your profit margins. If you sell digital software with zero fulfillment cost, a 1.5x ROAS is highly profitable. If you sell heavy physical goods with tiny margins, you might need a 4.0x ROAS just to break even. This is why calculating True ROI is essential.
Should I include shipping in the Cost of Goods (COGS)?
Yes. When calculating True ROI on an ad campaign, COGS should be exactly what it costs you to deliver the item into the customer's hands (manufacturing + wholesale shipping + outbound postage).
The tools and calculators provided on The Simple Toolbox are intended for educational and informational purposes only. They do not constitute financial, legal, tax, or professional advice. While we strive to keep calculations accurate, numbers are based on user inputs and standard assumptions that may not apply to your specific situation. Always consult with a certified professional (such as a CPA, financial advisor, or attorney) before making significant financial or business decisions.
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